WASHINGTON – Incoming Senate Armed Services Committee Chairman John McCain wants to prohibit the Pentagon from award cost-plus contracts, arguing such deals encourage nefariousness.
The Arizona Republican believes US weapon programs like the USS Gerald Ford were set up with contract structures that bred massive cost overruns. And he's hellbent on making sure it doesn't happen again.
"I go back to Arizona and I say, 'By the way, we built an aircraft carrier called the Gerald R. Ford," McCain said Thursday. "It had a $2.4 billion cost overrun — and there are still more cost overruns. That is hard-for-me-to-justify defense spending. It's disgraceful."
McCain's cost-plus feelings are nothing new. But come January, he'll chair the Defense Department oversight committee — meaning he will write a Pentagon policy bill that could contain language on the controversial contracts.
"I'm continuing to try to ban them. All," McCain told CongressWatch. "There's no reason why all shouldn't be.
"If you don't ban them, here's what happens: They come in with a lowball contract, so they can get the contract, and then that's why the costs mount," McCain said. "If you had a roof that leaked would you ask a guy to come and fix it with a cost-plus contract?!"
A Center for Strategic and International Studies fact sheet on the contract type explains why McCain and others oppose them: "Some argue that cost-plus contracts, particularly those with fixed fees, may provide insufficient incentives to reduce costs."
The same fact sheet states cost-plus contracts can be "essential under the right conditions."
Citing work done by government watchdogs, the think tank pointed the blame for cost spikes on those in the public sector.
"As the [Government Accountability Office] reports found," CSIS stated, "overruns often result from the government's failure to understand and define requirements adequately up front."
